|
|||
2007-07-20 07:02:00 CEST 2007-07-20 07:02:00 CEST REGULATED INFORMATION TietoEnator Oyj - Quarterly reportTietoEnator s interim report 2/2007 (January - June 2007)TietoEnator Corporation Quarterly Report 20 July 2007, 8.00 am EET To download the PDF file, please use this link: http://hugin.info/3114/R/1140616/215564.pdf Key financials * Second-quarter net sales grew 5% to EUR 434.2 (411.8) million. Six-month net sales totalled EUR 876.4 (821.6) million with 7 % growth. * Organic growth 8% in the second quarter, 9% in the first half. * Second-quarter operating profit amounted to EUR 9.9 (26.3) million and included EUR 4.9 ( 3.5 gain) million of capital losses and EUR 3.3 (4.2) million of restructuring expenses. Operating margin excluding capital losses and gains was 3.4% (5.5). Half-year operating profit totalled EUR 44.4 (56.1) million. * Operating profit excluding capital losses and restructuring expenses totalled EUR 18.1 (26.9) million for the second quarter and EUR 50.9 (58.9) million for the six months. * Profit before taxes EUR 8.9 (25.3) million in the second quarter, EUR 41.3 (54.9) million in the first half. * Second-quarter profit after taxes EUR 5.0 (18.0) million, EUR 29.1 (38.8) million in the first half. * Second-quarter EPS EUR 0.07 (0.24), half-year EPS EUR 0.39 (0.51). * EUR 80 million share repurchase programme to be started. General market overview The market for IT services and solutions is active providing good growth prospects. Many customers are searching for new sources of revenue growth. Utilizing those growth opportunities typically means investments in IT. The parallel search for cost savings, flexibility and business process efficiency is however maintaining tough competition in the market. In most areas prices are either stable or slightly higher than the year before. In some areas, like infrastructure services, price pressure persists. Labour market mobility is at a high level. Higher personnel turnover increases pressure on personnel costs in addition to the annual raises. Development of customer industries, acquisitions and divestments The market situation in most of TietoEnator's customer industries was positive. Growth varied, however, in TietoEnator's individual business areas. The overall demand in the financial services sector is strong. Demand in partnership services is stable but prices are under pressure. In consulting and systems integration demand is especially good in Sweden and the UK. In solution businesses the market is strong but in some areas very competitive. TietoEnator is investing heavily in solutions development and in the core banking area some of TietoEnator's large delivery projects turned out to be very challenging. In January TietoEnator agreed to acquire Swedish Abaris AB, which specializes in securities processing solutions. The company employs some 90 people in Sweden, Finland and Norway and its net sales in 2007 are expected to amount to EUR 10 million. The acquisition took effect on 1 January 2007. At the beginning of June TietoEnator divested Banking & Insurance's SAP businesses in Germany in two transactions to Resco GmbH and the management of TietoEnator's SAP Human Capital Management consulting team. In 2006 the total net sales of these businesses were about EUR 5.8 million and the operating loss was about EUR 1.2 million. In the first half of 2007 the businesses reached net sales of EUR 1.7 million and an operating loss of EUR 0.7 million. The businesses employed close to 40 people. The overall market situation in the telecom and media sectors is good and TietoEnator's prospects for further growth are promising. The telecom sector is in the midst of extensive changes like the convergence of technologies and consolidation, which is creating plenty of outsourcing and out-tasking opportunities. Cost savings continue to be the main driver for investments, which is maintaining price pressure. In January TietoEnator recruited 140 people formerly working for the Taiwan-based BenQ's R&D centre in Wroclaw, southern Poland. At the beginning of February TietoEnator took over Ericsson's design centre in Aarhus, Denmark, with 86 employees. The design centre supplies IP software building blocks used in Ericsson products. In April TietoEnator signed an agreement with Siemens IT Solutions and Services in Italy regarding the streamlining of business-critical and customer-related processes and services for mobile telephony. The value of the contract is expected to be EUR 40 million and the contract period is three years. In June TietoEnator agreed on further co-operation with Nokia Siemens Networks. TietoEnator incorporated parts of Nokia Siemens Networks' Finnish R&D operations for mobile networks and took over the R&D responsibilities for certain parts of Nokia Siemens Networks' product portfolio. Approximately 230 employees were transferred to TietoEnator Telecom & Media at the beginning of July. Demand in the Finnish government sector is good. Government customers plan to start several large development projects in the coming years. The positive development in the manufacturing industry continued. Retail customers are looking for IT systems to help them provide better and more focused service to their customers. Competition and price pressure remained in all of these areas. In Finland the healthcare market is favourable for solution-based business. Demand is good but the market is competitive. In Sweden and Norway the market is fragmented and developing slowly. There have been a lot of project postponements and scale-backs. In Germany health service providers suffer from a poor financial situation, which has made the market very competitive. In Sweden and Norway TietoEnator is tranforming its hospital information system business from a solution-based to services-based business. In Germany the solution upgrade that was delayed earlier this year was finalized and is now ready for customer deliveries. In the forest sector there is increasing interest in investments to harmonize IT systems and infrastructure. Customers' activity has grown further as their financial performance has improved. Sales cycles in the sector are very long however. In the energy sector the market situation remains favourable. In oil and gas higher investments in exploration are expected to increase investments in IT. In the utilities sector automatic meter reading is the main investment driver and TietoEnator expects full-scale implementation of these systems in the coming years. In processing and network services market conditions are good and there is a continous flow of mid-sized outsourcing contracts coming to the market. The inclination to switch supplier in case of dissatisfaction has increased. Prices for new contracts and renewals are under pressure. In June the Swedish state-owned pharmacy chain Apoteket AB chose TietoEnator as its new supplier of ICT operations management, applications integration, applications management and workstation management and support. The average term of the contracts is close to 4 years. According to TietoEnator estimates, the total value of the order will be around EUR 57 million. In addition there are options to extend the contracts by a further one to two years. The outsourcing deal came into effect at the end of June. In June TietoEnator and If P&C Insurance agreed on the renewal of If's end user services agreement covering all Nordic countries as well as If's offices outside the Nordic area, excluding the Baltic countries. The contract has now been renewed and prolonged until 31 May 2010. Net sales Second-quarter net sales grew 5% to EUR 434.2 (411.8) million. Organic growth stayed on a healthy level of 8% or 7% in local currencies. For the Group as a whole prices remained roughly at the same level on average as the year before. Q2 net H1 net sales Q2 organic sales H1 organic growth, % growth, % growth, % growth, % Banking & Insurance 0 -1 4 3 Telecom & Media 21 20 20 19 Government, Manufacturing -23 1 -23 2& Retail Healthcare & Welfare -5 -5 -2 -2 Forest & Energy 11 8 13 9 Processing & Network 3 3 5 5 Growth in the second quarter was strongest in Telecom & Media driven by several new outsourcing contracts and good general demand in the market. The energy sector, experiencing good market conditions, was the main contributor to Forest & Energy's healthy growth. Banking & Insurance's and Healthcare & Welfare's net sales were impacted by the challenges in their solution-based businesses. Government, Manufacturing & Retail's total growth was reduced by the divestment of government businesses in Denmark, Norway and Sweden in 2006. Six-month net sales grew 7% to EUR 876.4 (821.6) million or 6% in local currencies. Organic growth totalled 9%. In the first half of 2007 TietoEnator's growth in Finland was positive at 3%. Sweden grew 8%. Net sales in Germany benefited from new outsourcing contracts. Germany grew 53%. Denmark declined 22% and Norway 15% mainly due to the divestment of government businesses in late 2006. In the UK growth was strong at 39%. Telecom and media, growing strongly, increased its share of Group net sales to 35% (30). The banking and insurance sector contributed 22% (23) whereas public sector's contribution declined to 15% (18). The order backlog, which comprises only services ordered with binding contracts, amounted to EUR 1 314.3 million (1 216.7) at the end of the period, 8% higher than a year before. Processing & Network's share of the order backlog is about 30%. Approximately 39% (38) of the backlog is expected to be invoiced in 2007. Profitability Second-quarter operating profit amounted to EUR 9.9 (26.3) million. The operating profit includes capital losses of EUR 4.9 (3.5 gain) million mainly from the divestment of parts of the German Banking & Insurance business. Excluding capital losses the operating margin totalled 3.4% (5.5). Higher personnel expenses and subcontracting costs together with unchanged average prices had negative impact on profitability. In some parts of the solution-based business profitability suffered from loss-making delivery projects and high development costs. Capital losses (compared to capital gains in the second quarter 2006) deepened the decline in reported operating profit. H1 EBIT% Q2 EBIT% excl. excl. capital capital gains and Q2 restructuring gains and losses expenses, MEUR losses Banking & Insurance -5.4 0.4 1.2 Telecom & Media 7.7 0.0 8.5 Government, 5.6 0.5 7.8 Manufacturing & Retail Healthcare & -0.8 0.0 -1.2 Welfare Forest & Energy 7.3 0.2 7.7 Processing & 6.2 1.4 7.4 Network Digital Innovations 0.9 (allocated to BAs Restructuring expenses amounted to EUR 3.3 (4.2) million in the second quarter. The underlying operating profit (excluding capital losses and restructuring expenses) totalled EUR 18.1 (26.9) million. Some of the expected restructuring actions did not take place during the quarter, but were delayed. Due to the vacation period the second and third quarters are seasonally weaker than the other two quarters of the year for TietoEnator. This seasonality is most visible in business areas with a high proportion of professional services like Telecom & Media and Government, Manufacturing & Retail. Banking & Insurance's operating profit was negative in the second quarter. The partnership and services businesses performed well. The core banking area suffered from a few large, challenging loss-making delivery projects. The negative impact of these projects was about EUR 3 million in the quarter. Most of the other solution areas are developing positively but profits in the solution business are burdened by higher than normal solution development costs. The German operation continued to perform poorly. Part of the German business was divested in June, which affected financial performance in the second quarter. Healthcare & Welfare's challenges in the solution-based hospital information system business in Sweden, Norway and Germany continued to have a negative impact on its profitability. Net financial expenses stood at EUR 1.0 (1.0) million in the second quarter. Net interest expenses were EUR 1.9 (0.3) million and one-time net gains from foreign exchange transactions EUR 1.0 (0.5) million. Second-quarter earnings per share totalled EUR 0.07 (0.24). EPS was affected by capital losses of EUR 0.06 (by capital gains +0.05) per share, amortization on intangibles of EUR 0.03 (0.03) per share and stock option expenses of EUR 0.02 (0.01) per share. Excluding these items EPS amounted to EUR 0.18 (0.23). Six-month operating profit amounted to EUR 44.4 (56.1) million. In the first half there were EUR 3.2 million of net capital losses. Excluding capital losses and gains the operating profit totalled EUR 47.6 (47.9) million representing a margin of 5.4% (5.8). Restructuring expenses amounted to EUR 3.3 (11.0) million in the first half as there were no such expenses in the first quarter. The underlying operating profit for the first half totalled EUR 50.9 million which is lower than the EUR 58.9 million in 2006. Six-month net financial expenses stood at EUR 3.1 (1.2) million. Net interest expenses were EUR 3.4 (0.2) million and one-time net gains from foreign exchange transactions EUR 0.5 (negative 0.6) million. Six-month earnings per share totalled EUR 0.39 (0.51). EPS was affected by net capital losses of EUR 0.03 (0.11 by capital gains) per share, amortization on intangibles of EUR 0.07 (0.05) per share and stock option expenses of EUR 0.03 (0.02) per share. Excluding these items EPS amounted to EUR 0.52 (0.47). Operating profit (EBIT) included EUR 2.4 (2.2) million from amortization on allocated intangible assets in the second quarter and EUR 4.9 (4.2) million in the first half. The costs arising from share-based payments of EUR 1.5 (1.1) million in the second quarter and EUR 2.0 (1.9) million in the first half were included in employee benefit expenses. The 12-month rolling return on capital employed (ROCE) was 18.7% and the return on shareholders' equity (ROE) 14.8%. 'Profit 2007' programme TietoEnator launched a programme called 'Profit 2007' at the beginning of February to improve its business performance. The programme includes plans to cut costs and divest or restructure loss-making businesses. The cost-saving initiatives launched at the start of the programme started to produce some effects during the quarter. The monitoring and support of low-performing units is on-going. In order to reduce external recruitments a new initiative was launched under the programme to improve internal mobility. Productivity gains were targeted by moving resources from internal development to customer work. Restructuring was implemented in some underperforming units resulting in total restructuring expenses of EUR 3.3 million in the first half. The divestment of parts of the German Banking & Insurance business was completed during the quarter. Financing and investments Cash flow from operations amounted to EUR 34.8 (56.6) million in the first half. Operating profit contributed EUR 81.0 (78.8) million and the increase in working capital consumed EUR 36.7 (4.9) million. Tax payments amounted to EUR 8.8 million. Net working capital increased mainly due to unfavourable timing of invoicing and large receivables due after end of the quarter especially in Telecom & Media. The dividend payment of EUR 88.3 was made in April. Payments for new acquisitions totalled EUR 12.5 million in the first half. Divestments generated EUR 3.5 million. The equity ratio was 44.4% (35.0). Gearing decreased to 31.2% (61.6) as Personec Group with a substantial amount of debt was divested in December 2006. Net debt totalled EUR 177.7 (283.0) million including EUR 249.3 million in interest-bearing debt, EUR 7.9 million in finance lease liabilities, EUR 8.5 million in finance lease receivables and EUR 70.9 million in cash and cash equivalents. The interest-bearing debt consists of two seven-year private placement bonds, at EUR 100 million and at EUR 50 million, and usage of EUR 99 million from the short-term EUR 250 million commercial paper programme. At the end of the quarter unused credit facilities totalled about EUR 250 million . Accrual-based investments totalled EUR 40.2 (44.5) million for the period. Capital expenditure including financial leasing accounted for EUR 24.7 (30.8) million, investments in business activities for EUR 0.0 (5.1) million, and investments in subsidiary and associated company shares for EUR 15.6 (8.6) million. Personnel The number of full-time employees totalled 15 408 (14 191) at the end of the first half. Acquisitions and new outsourcing contracts added about 80 employees during the first half. The number of people recruited during the period increased: a total of 603 (462) employees were hired. The highest recruitment numbers were in Finland, Poland and Sweden. In total about 115 employees were affected by personnel adjustments during the first half mostly in Telecom & Media and Processing & Network. Employee turnover has continued to increase as the labour market is very active. The 12-month rolling figure stood at 9.8% (8.1) at the end of June. The average number of full-time employees was 15 178 (14 132) in the first half. At the end of the second quarter the number of people in countries with favourable cost levels totalled about 2 500 (1 500) or 15% (10) of the total headcount. New global sourcing site to be established in Belarus TietoEnator has decided to establish a new global sourcing site in Minsk, Belarus during the autumn of 2007. The operations will be set up with a local partner and TietoEnator holding majority ownership. Minsk was chosen due to its closeness to TietoEnator's main customer markets, attractive cost level, good talent availability and good skills in English and Russian. In several years TietoEnator plans to expand the Minsk operation to a size equivalent to its Ostrava site in the Czech Republic. In 2007 the establishment of the new site will have no material impact on TietoEnator's financial performance. Management On 11 June TietoEnator announced that its President and CEO Pentti Heikkinen's aortic valve insufficiency was operated on the week starting 11 June. He is expected to return from sick leave and start work normally in mid-August. In the meantime the CEO's duties have been assumed by TietoEnator's Deputy CEO Åke Plyhm. In May Päivi Lindqvist, Executive Vice President, Communications and Investor Relations decided to leave the company from 13 August 2007. In June Reeta Kaukiainen was appointed Executive Vice President, Communications and Investor Relations from 13 August 2007. Transactions with related parties The related parties of TietoEnator are its Board of Directors, President and CEO, the Corporate Management Team and the Group's associated companies. Chairman of the Board of Directors Matti Lehti's service contract with TietoEnator ended on 30 June 2007 as he reached his retirement age of 60 years. He continues as non-executive Chairman of the Board of Directors. Transactions with the associated companies are not considered to be material. Shares and options The outstanding number of shares excluding the shares in the company's possession was 73 596 462 at the end of June. At the end of the quarter TietoEnator held a total of 500 000 of its own shares representing 0.7% of all the shares and voting power. The shares were repurchased in May 2006 for the three-year share-based incentive plan. In June TietoEnator's Board of Directors decided to cancel 138 350 own shares repurchased in May 2006 for the three-year share-based incentive plan. TietoEnator's Board of Directors also decided to cancel 77 000 stock options 2002 A/B held by a subsidiary. TietoEnator's Annual General Meeting 2007 approved authorizations to issue share and option rights or raise convertible bond loans. The Board has not exercised these authorizations. Share repurchase programme to be started In July TietoEnator's Board of Directors decided to start a new share repurchase programme totalling EUR 80 million. Under the 2007 AGM authorization the shares will be purchased to develop the company's long-term capital structure. The repurchases will start on 1 August at the earliest. Some items affecting 2007 The net of acquisitions and divestments finalized to date is expected to have an impact of about -2% on net sales for the full year 2007. The restructuring and related costs are currently expected to exceed the level of 2006 (EUR 12.4 million). Over EUR 5 million is expected to take place in the third quarter. TietoEnator expects amortization of intangible assets to total about EUR 10 (8.8) million and stock option expenses around EUR 2 (4.0) million. Costs related to the share-based incentive programme depend on the company's performance in 2007 and are currently expected to amount to a maximum of about EUR 5 (0) million. Risks and uncertainties The main risks TietoEnator is facing and actively managing are: the market becoming more commoditized, price pressure, new low-cost competition, customers demanding tighter contract terms, the availability and cost of resources, and the ability to control challenging deliveries. Prospects for 2007 TietoEnator expects the general IT market to be active in 2007. On average prices are expected to stay roughly in line with 2006 levels. The turnaround of underperforming units will take time and there are some deliveries with low margins. The national salary raises agreed in the collective labour agreements in Finland and Sweden are expected to create pressure for higher personnel costs, and the cost increase cannot be fully met by price increases. Higher personnel turnover and active labour market will result in higher subcontracting costs than in 2006. TietoEnator expects its full-year organic growth in 2007 to be higher than the 2006 level of 2%. There have not been enough new outsourcing contracts to fully compensate for those contracts that will cease to have an impact on growth during 2007. TietoEnator considers reaching the earlier communicated underlying operating profit guidance of over EUR 124 million difficult for 2007. The underlying operating profit does not include potential capital gains, capital losses and restructuring expenses. New long-term financial targets TietoEnator's Board of Directors decided on new long-term financial targets on 19 July. The new long-term targets are: - To grow organically at a higher rate than the relevant market. Growth strategy is also supported by acquisitions - Operating margin (EBIT%) of over 10% The targets related to capital structure and dividend payout remain the same: - Long-term gearing target of 40% - Dividend payout ratio of around 50% of net income including one-time items. However, the annual dividend payout ratio will depend on the financial position and the major investment needs of the company. Financial calendar in 2007 Capital Markets Day on 12 September in Stockholm Interim Report January - September 2007 on 26 October The figures in this report are for continuing operations. The Personec Group business divested in December 2006 is treated as a discontinued operation for the whole of 2006. The interim report has been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as adopted by EU. The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2006 and as described in the annual financial statements. In addition IFRS 7 "Financial Instruments: Disclosures" has been applied from the beginning of 2007 but will not have any major impact on the Group. The required information will be disclosed in the annual financial statements for the year ending 31 December 2007. The figures in this report are unaudited. Key figures 2007 2006 2007 2007 2006 2006 4-6 4-6 1-3 1-6 1-6 1-12 Earnings per share, EUR - basic 0.07 0.23 0.33 0.39 0.52 3.25 - diluted 0.07 0.23 0.33 0.39 0.51 3.25 - basic from continuing operations 0.07 0.24 0.33 0.39 0.51 1.15 - basic from discontinued operations - -0.01 - - 0.01 2.10 Earnings per share from continuing operations, EUR a) 0.18 0.23 0.34 0.52 0.47 1.18 Equity per share, EUR 6.10 7.70 7.75 6.10 8.51 Return on equity rolling 12 month, % 22.8 17.5 14.8 22.8 15.5 Return on capital employed rolling 12 month, % 21.0 21.8 18.7 21.0 18.7 Equity ratio % 35.0 44.5 44.4 35.0 48.4 Net interest-bearing liabilities, EUR million 283.0 72.6 177.7 283.0 93.4 Gearing, % 61.6 12.9 31.2 61.6 14.9 Investments in continuing operations, EUR million 12.9 20.0 27.3 40.2 44.5 77.9 a) Excluding goodwill impairments, amortization on allocated intangible assets from acquisitions, stock option expenses and one-time capital gains. Income Statement, EUR million 2007 2006 2007 2006 Change 2006 4-6 4-6 1-6 1-6 % 1-12 Continuing operations Net sales 434.2 411.8 876.4 821.6 7 1 646.5 Other operating income 2.8 4.7 7.4 12.0 -38 25.1 Employee benefit expenses 257.9 240.4 511.2 482.0 6 938.5 Depreciation and amortization 16.2 14.9 32.2 29.2 10 59.4 Impairment of goodwill - - - - - - Other operating expenses 153.0 134.9 296.0 266.5 11 546.2 Share of associated companies' result 0.0 0.0 0.0 0.2 -100 0.2 Operating profit (EBIT) 9.9 26.3 44.4 56.1 -21 127.7 Net interest expenses -1.9 -0.3 -3.4 -0.2 1 600 -2.1 Net exchange losses/gains 1.0 -0.4 0.5 -0.6 -183 -0.6 Other financial income and expenses -0.1 -0.3 -0.2 -0.4 -50 -0.5 Profit before taxes 8.9 25.3 41.3 54.9 -25 124.5 Income taxes -3.9 -7.3 -12.2 -16.1 -24 -37.2 Net profit for the period from continuing operations 5.0 18.0 29.1 38.8 -25 87.3 Discontinued operations Net profit for the period from discontinued operations - -0.6 - 1.2 159.7 Net profit for the period 5.0 17.4 29.1 40.0 -27 247.0 Net profit for the period attributable to Shareholders of the parent company 4.8 17.0 28.8 38.7 -26 243.9 Minority interest in continuing operations 0.2 0.2 0.3 0.7 -57 1.0 Minority interest in discontinued operations - 0.2 - 0.6 2.1 5.0 17.4 29.1 40.0 -27 247.0 Earnings attributable to the shareholders of the parent company per share, EUR Basic 0.07 0.23 0.39 0.52 -25 3.25 Diluted 0.07 0.23 0.39 0.52 -25 3.25 Basic from continuing operations 0.07 0.24 0.39 0.51 -24 1.15 Basic from discontinued operations - -0.01 - 0.01 2.10 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 10.6 million (7.2 previous year) and the stock option expenses (share based payments) were EUR 2.0 million (1.9). Other operating expenses include EUR 4.9 million of capital losses. Number of shares 2007 2007 2007 2006 4-6 1-3 1-6 4-6 Outstanding shares, end of period Basic 73 596 462 73 596 462 73 596 462 75 341 462 Diluted 73 842 024 73 654 512 73 842 024 75 341 462 Outstanding shares, average Basic 73 596 462 73 596 462 73 596 462 75 532 805 Diluted 73 787 320 73 654 512 73 700 710 75 612 910 Company's possession of its own shares, End of period 500 000 500 000 500 000 500 000 Average 500 000 965 333 731 381 594 887 Balance Sheet, EUR million 2007 2006 Change 2006 30 Jun 30 Jun % 31 Dec Goodwill 451.4 473.3 -5 448.4 Other intangible assets 79.4 82.7 -4 82.6 Property, plant and equipment 83.6 94.3 -11 87.9 Deferred tax assets 69.5 86.7 -20 75.2 Investments in associated companies 1.5 4.0 -63 2.3 Other non-current assets 1.4 2.0 -30 1.4 Total non-current assets 686.8 743.0 -8 697.8 Trade and other receivables 577.7 501.7 15 503.0 Current income tax receivables 28.0 16.5 70 22.3 Interest-bearing current assets 8.5 9.6 -11 12.7 Cash and cash equivalents 70.9 107.3 -34 138.9 Total current assets 685.1 635.1 8 676.9 Total assets 1 371.9 1378.1 0 1 374.7 Share capital, share issue premiums and other reserves 143.2 142.7 0 144.6 Retained earnings 423.8 307.2 38 477.8 Parent shareholders equity 567.0 449.9 26 622.4 Minority interest 3.1 9.6 -68 4.0 Total Equity 570.1 459.5 24 626.4 Finance lease liability 7.9 17.1 -54 13.5 Shareholders' loan - 44.6 0.8 Other interest-bearing loans 150.6 128.3 17 153.6 Deferred tax liabilities 23.9 20.7 15 20.0 Pension obligations 41.8 32.9 27 46.4 Provisions 1.5 8.1 -81 3.4 Other non-current liabilities 3.2 1.0 220 3.2 Total non-current liabilities 228.9 252.7 -9 240.9 Trade and other payables 455.4 450.1 1 410.6 Current income tax liabilities 18.8 6.0 213 19.7 Interest-bearing loans 98.7 209.8 -53 77.1 Total current liabilities 572.9 665.9 -14 507.4 Total equity and liabilities 1 371.9 1 378.1 0 1 374.7 Deferred tax assets end of June 2007 include the remaining EUR 27 million, which rose from the loss incurred in the parent company related to the intra-group transaction carried out in April 2004. Net working capital in the balance sheet, EUR million 2007 2006 Change 2006 30 Jun 30 Jun % 31 Dec Accounts receivable 339.8 307.8 10 321.3 Other working capital receivables 237.2 193.2 23 181.7 Working capital receivables included in assets 577.0 501.0 15 503.0 Operative accruals 225.9 241.6 -6 215.6 Other working capital liabilities 223.4 202.6 10 192.2 Pension obligations and provisions 43.3 41.0 6 49.7 Working capital liabilities included in current liabilities 492.6 485.2 2 457.5 Net working capital in the balance sheet 84.4 15.8 434 45.5 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 2007 2006 2007 2007 2006 2006 4-6 4-6 1-3 1-6 1-6 1-12 Cash flow from operations Operating profit 9.9 26.3 34.5 44.4 56.1 127.7 Adjustments to operating profit Depreciation and amortization 16.2 14.9 16.0 32.2 29.2 59.4 Profit/loss on sale of fixed assets and shares 4.8 -3.6 -1.7 3.1 -8.3 -15.7 Share of associated companies' result 0.0 0.0 0.0 0.0 -0.2 -0.2 Other adjustments 1.0 1.2 0.3 1.3 2.0 3.5 Change in net working capital -29.9 -8.1 -6.8 -36.7 -4.9 -37.8 Cash generated from continuing operations 2.0 30.7 42.3 44.3 73.9 136.9 Net financial items 1.0 -0.4 -1.7 -0.7 -1.3 -2.8 Income taxes paid -7.0 -4.0 -1.8 -8.8 -16.0 -24.8 Net cash flow from continuing operations -4.0 26.3 38.8 34.8 56.6 109.3 Net cash flow from discontinued operations - 1.2 - - 8.4 3.7 Total net cash flow from operations -4.0 27.5 38.8 34.8 65.0 113.0 Cash Flow, EUR million 2007 2006 2007 2007 2006 2006 4-6 4-6 1-3 1-6 1-6 1-12 Cash flow from investing activities Acquisition of Group companies and business operations, net of cash acquired -3.2 -12.3 -9.3 -12.5 -12.9 -24.6 Capital expenditures -12.6 -15.2 -12.1 -24.7 -30.8 -50.6 Disposal of business operations and associated company -1.7 4.2 1.9 0.2 9.4 30.4 Other investing activities 4.0 -0.4 0.4 4.4 0.4 1.6 Net cash used in investing activities from - continuing operations -13.5 -23.7 -19.1 -32.6 -33.9 -43.2 - discontinued operations - -0.2 - - -24.8 -4.2 Total net cash used in investing activities -13.5 -23.9 -19.1 -32.6 -58.7 -47.4 Cash flow from financing activites Dividends -88.3 -64.7 -0.2 -88.5 -65.8 -65.8 Repurchase of own shares - -12.4 0.0 - -12.4 -52.3 Proceeds from finance lease liabilities 0.2 0.0 0.0 0.2 0.0 0.6 Payment of finance lease liabilities -3.5 -2.4 -2.2 -5.7 -5.1 -9.3 Change in interest-bearing liabilities 88.6 87.2 -69.2 19.4 59.4 41.6 Net cash used in other financing activities 1.6 -1.1 2.9 4.5 0.5 -4.3 Net cash used in financing activities from - continuing operations -1.4 6.6 -68.7 -70.1 -23.4 -89.5 - discontinued operations - 0.0 - - 24.9 63.0 Total net cash used in financing activities -1.4 6.6 -68.7 -70.1 1.5 -26.5 Change in cash and cash equivalents -18.9 10.2 -49.0 -67.9 7.8 39.1 Cash and cash equivalents at beginning of period -89.6 -97.1 -138.9 -138.9 -99.8 -99.8 Foreign exchange differences -0.2 0.0 0.3 0.1 0.3 0.0 Cash and cash equivalents at end of period 70.9 107.3 89.6 70.9 107.3 138.9 -18.9 10.2 -49.0 -67.9 7.8 39.1 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 2005 78.7 62.7 -80.0 -8.2 435.5 12.2 500.9 Translation difference 1.2 3.2 -5.2 -0.8 Minority interest -3.9 -3.9 Cancellation of own shares -2.9 2.9 0.0 Transfer between restricted and non-restricted equity 0.1 -0.1 0.0 Share based payments recognised against equity 1.9 1.9 Dividend -64.5 -64.5 Own shares purchased -12.4 -12.4 Other changes -1.7 -1.7 Net profit for the period 38.7 1.3 40.0 At 30 June 2006 75.8 66.9 -80.0 -5.0 392.2 9.6 459.5 Balance at 31 Dec 2006 75.8 68.8 -52.3 -6.6 536.7 4.0 626.4 Translation difference -1.4 -1.4 5.5 2.7 Minority interest -1.2 -1.2 Cancellation of own shares 39.9 -39.9 0.0 Share based payments recognised against equity 1.4 1.4 Dividend -88.3 -88.3 Net profit for the period 28.8 0.3 29.1 At 30 June 2007 75.8 67.4 -12.4 -8.0 444.2 3.1 570.1 SEGMENT INFORMATION Net sales by business area, EUR million (primary segment) 2007 2006 Change 2007 2006 Change 2006 Continuing operations 4-6 4-6 % 1-6 1-6 % 1-12 Banking & Insurance 70 71 0 149 143 4 284 Telecom & Media 162 134 21 323 270 20 542 Government, Manufacturing & Retail 47 61 -23 97 127 -23 236 Healthcare & Welfare 34 36 -5 69 70 -2 144 Forest & Energy 45 41 11 90 80 13 161 Processing & Network 97 94 3 195 185 5 374 Group elimination incl other -22 -25 -13 -45 -51 -12 -95 Group total 434 412 5 876 822 7 1 646 Country Net sales, EUR million (secondary segment) 2007 Change Share 2006 Share 2006 Change Continuing operations 1-6 % % 1-6 % 1-12 % Finland 396 3 45 384 47 751 3 Sweden 246 8 28 229 28 454 -3 Germany 75 53 9 49 6 124 21 Norway 38 -15 4 44 5 81 4 Great Britain 28 39 3 20 2 48 48 Denmark 22 -22 3 28 3 51 -1 Italy 13 67 1 8 1 17 - France 12 21 1 10 1 18 -14 Netherlands 10 -10 1 12 1 25 61 Other 36 -4 4 38 5 77 11 Group total 876 7 100 822 100 1 646 5 The first quarter Net sales by country figures have been corrected. Net sales by industry segment, EUR million 2007 Change Share 2006 Share 2006 Change Continuing operations 1-6 % % 1-6 % 1-12 % Banking and insurance 195 5 22 186 23 374 23 Public 131 -12 15 148 18 292 4 Telecom and media 309 25 35 248 30 515 -6 Forest 43 3 5 42 5 88 -1 Energy 48 22 5 39 5 79 6 Manufacturing 49 9 6 45 5 89 11 Retail & Logistics 41 -8 5 45 5 88 -9 Other 60 -12 7 69 8 122 21 Group total 876 7 100 822 100 1 646 5 Operating profit (EBIT), EUR million 2007 2006 Change 2007 2006 Change 2006 Continuing operations 4-6 4-6 % 1-6 1-6 % 1-12 Banking & Insurance -7.6 4.9 -254.3 -2.0 9.4 -121.6 20.1 Telecom & Media 12.5 7.7 63.4 27.3 16.9 62.1 37.5 Government, Manufacturing& Retail 1.7 5.0 -66.2 6.6 14.6 -54.8 31.2 Healthcare & Welfare -0.5 1.8 -126.3 0.7 3.2 -78.9 12.5 Forest & Energy 3.3 1.5 126.0 7.0 4.1 70.7 7.8 Processing & Network 6.0 9.2 -34.7 14.4 18.1 -20.4 39.7 Business areas 15.5 30.0 -48.4 54.0 66.4 -18.7 148.9 Group Operations incl other -5.7 -7.1 -53.1 -9.6 -13.5 4.3 - 24.7 Associated companies outside BA 0.0 0.0 - 0.0 0.0 - 0.0 Group capital gain 0.1 3.3 - 0.1 3.3 - 3.5 Operating profit (EBIT) 9.9 26.3 -62.3 44.4 56.1 -20.9 127.7 Operating profit excl capital gains and impairment losses, EUR million 2007 2006 Change 2007 2006 Change 2006 Continuing operations 4-6 4-6 % 1-6 1-6 % 1-12 Banking & Insurance -3.8 4.9 -177.3 1.8 9.4 -81.3 20.1 Telecom & Media 12.5 7.7 63.4 27.4 16.9 62.3 38.7 Government, Manufacturing& Retail 2.6 5.0 -47.4 7.6 9.9 -23.8 18.0 Healthcare & Welfare -0.3 1.8 -114.6 -0.8 3.2 -125.7 12.5 Forest & Energy 3.3 1.5 126.0 7.0 4.1 70.7 7.8 Processing & Network 6.0 9.0 -33.4 14.4 17.9 -19.5 39.5 Business areas 20.5 29.9 -31.6 57.2 61.4 -6.8 136.7 Group Operations incl other -5.7 -7.1 20.2 -9.6 -13.5 28.7 - 24.6 Associated companies outside BA 0.0 0.0 - 0.0 0.0 - 0.0 Operating profit (EBIT excl cap gain) 14.8 22.7 -35.1 47.6 47.9 -0.6 112.0 Operating margin (EBIT), % 2007 2006 Change 2007 2006 Change 2006 Continuing operations 4-6 4-6 % 1-6 1-6 % 1-12 Banking & Insurance -10.8 6.9 -17.7 -1.4 6.6 -8.0 7.1 Telecom & Media 7.7 5.7 2.0 8.5 6.2 2.2 6.9 Government, Manufacturing & Retail 3.6 8.1 -4.6 6.9 11.5 -4.8 13.2 Healthcare & Welfare -1.4 5.0 -6.4 1.0 4.6 -3.6 8.7 Forest & Energy 7.3 3.6 3.7 7.7 5.1 2.6 4.9 Processing & Network 6.2 9.8 -3.6 7.4 9.8 -2.4 10.6 Business areas 3.6 7.3 -3.7 6.2 8.1 -1.9 9.0 Operating margin (EBIT) 2.3 6.4 -4.1 5.1 6.8 -1.8 7.8 Operating margin (EBIT) excl capital gains and impairment losses, % 2007 2006 Change 2007 2006 Change 2006 Continuing operations 4-6 4-6 % 1-6 1-6 % 1-12 Banking & Insurance -5.4 6.9 -12.3 1.2 6.6 -5.4 7.1 Telecom & Media 7.7 5.7 2.0 8.5 6.2 2.2 7.2 Government, Manufacturing & Retail 5.6 8.1 -2.6 7.8 7.8 0.0 7.6 Healthcare & Welfare -0.8 5.0 -5.8 -1.2 4.6 -5.8 8.7 Forest & Energy 7.3 3.6 3.7 7.7 5.1 2.6 4.9 Processing & Network 6.2 9.6 -3.4 7.4 9.7 -2.3 10.5 Business areas 4.7 7.3 -2.6 6.5 7.5 -0.9 8.3 Operating margin (EBIT), excl capital gains and impairment losses 3.4 5.5 -2.1 5.4 5.8 -0.4 6.8 Personnel End of period Average Continuing operations 2007 Change Share 2006 2006 2007 2006 By business area (primary segment) 1-6 % % 1-6 1-12 1-6 1-6 Banking & Insurance 2 224 2 14 2 181 2 193 2 243 2 179 Telecom & Media 5 420 17 35 4 619 5 107 5 325 4 681 Government, Manufacturing & Retail 1 587 - 19 10 1 970 1 532 1 571 1 984 Healthcare & Welfare 1 103 8 7 1 025 1 079 1 081 996 Forest & Energy 1 280 4 8 1 229 1 286 1 287 1 240 Processing & Network 2 102 5 14 2 005 1 966 2 060 1 982 Software Centres 1 130 72 7 655 925 1 054 577 Other Group Operations 562 11 4 507 507 558 492 Group total 15 408 9 100 14 191 14 597 15 178 14 132 From Jan 2007, 216 persons in India were moved from BA Healthcare & Welfare to Software Centre in Group Operations. Figures for 2006 have been restated. The change had a positive effect of 0.3 MEUR on EBIT 2006 in Group Operations and a corresponding negative effect in Healthcare & Welfare. End of period Average Continuing operations 2007 Change Share 2006 2006 2007 2006 By country (secondary segment) 1-6 % % 1-6 1-12 1-6 1-6 Finland 6 228 - 2 40 6 345 6 163 6 193 6 332 Sweden 3 337 - 1 22 3 358 3 239 3 338 3 456 Germany 1 330 47 9 903 1 342 1 357 888 Czech 919 66 6 555 769 857 506 Norway 747 - 15 5 875 742 752 864 Latvia 550 17 4 469 521 545 434 Poland 348 2 153 286 Denmark 331 - 8 2 358 221 301 358 Great Britain 329 7 2 306 314 317 326 India 266 44 2 185 231 265 166 Italy 234 36 2 172 176 218 169 France 124 24 1 100 114 120 106 Estonia 115 13 1 101 116 110 85 Lithuania 110 11 1 99 102 97 88 Netherlands 106 37 1 78 85 99 71 Other 334 17 2 286 310 323 283 Group total 15 408 9 100 14 191 14 597 15 178 14 132 The personnel figures for the associated companies under TietoEnator's management responsiblity are reported according to our holding. Personnel figures including these associated companies to 100% give a total of 15 806 (14 577) at the end of the period. Total assets by business area, EUR million (primary segment) 2007 2006 Change 2006 Continuing operations 30 Jun 30 Jun % 31 Dec Banking & Insurance 263.4 240.0 10 256.0 Telecom & Media 452.0 388.5 16 414.7 Government, Manufacturing & Retail 63.3 77.4 -18 64.1 Healthcare & Welfare 88.2 80.2 10 93.5 Forest & Energy 120.0 102.5 17 112.1 Processing & Network 176.9 176.0 0 187.3 Group elimination -25.2 -32.1 -21 -34.0 Business areas 1 138.5 1 032.5 10 1 093.9 Group Operations 233.4 332.5 -30 280.9 Group total 1 371.9 1 365.0 1 1 374.7 Discontinued operations, net impact - 13.0 - Total assets 1 371.9 1 378.1 0 1 374.7 Total liabilities by business area, EUR million (primary segment) 2007 2006 Change 2006 Continuing operations 30 Jun 30 Jun % 31 Dec Banking & Insurance 115.3 88.0 31 93.2 Telecom & Media 191.9 138.6 38 166.6 Government, Manufacturing & Retail 40.8 52.3 -22 39.2 Healthcare & Welfare 34.4 30.2 14 32.0 Forest & Energy 70.6 51.1 38 52.3 Processing & Network 69.3 79.0 -12 76.3 Group elimination -22.9 -37.7 -39 -31.0 Business areas 499.4 401.6 24 428.6 Group Operations 302.3 374.1 -19 319.7 Group total 801.8 775.7 3 748.3 Discontinued operations, net impact - 142.8 - Total liabilities 801.8 918.6 -13 748.3 Segment assets by country, EUR million (secondary segment) 2007 2006 Change 2006 Continuing operations 30 Jun 30 Jun % 31 Dec Finland 326.6 306.3 7 329.0 Sweden 344.7 312.6 10 317.4 Norway 98.9 89.9 10 97.5 Germany 174.3 130.8 33 174.6 Great Britain 89.3 89.0 0 99.1 Other 104.7 104.0 1 76.2 Business areas 1 138.5 1 032.5 10 1 093.9 Depreciation, EUR million 2007 2006 Change 2007 2006 Change 2006 Continuing operations 4-6 4-6 % 1-6 1-6 % 1-12 Processing & Network 9.1 8.0 15 18.0 15.4 17 31.5 whereof Finland 7.6 7.3 5 15.1 14.0 8 27.0 Sweden 1.3 0.5 146 2.5 1.1 123 3.8 Other countries 0.2 0.2 30 0.4 0.3 40 0.7 Other 4.5 4.8 -6 9.3 9.6 -4 19.2 Group total 13.7 12.8 7 27.3 25.0 9 50.7 Amortization on allocated intangible assets from acquisitions, EUR million 2007 2006 Change 2007 2006 Change 2006 Continuing operations 4-6 4-6 % 1-6 1-6 % 1-12 Telecom & Media 1.3 1.3 2 2.5 2.4 5 4.9 Other 1.1 0.9 21 2.4 1.8 35 3.8 Group total 2.4 2.2 10 4.9 4.2 17 8.7 No impairment losses have been recognised during 2007 and 2006. Capital expenditure by business area, EUR million 2007 2006 Change 2007 2006 Change 2006 Continuing operations 4-6 4-6 % 1-6 1-6 % 1-12 Processing & Network 9.3 12.3 -24 16.7 25.2 -34 35.3 whereof Finland 8.5 7.2 18 14.2 15.3 - 8 22.1 Sweden 0.8 5.1 - 84 2.6 9.8 - 74 13.2 Other countries 0.0 0.0 - 0.0 0.0 - 0.0 Other 3.2 2.7 19 7.9 5.6 41 15.6 Group total 12.6 15.0 - 16 24.7 30.8 - 20 50.9 2007 2006 Change Commitments and contingencies, EUR million 30 Jun 31 Dec % For TietoEnator obligations Pledges - - On behalf of associated companies Guarantees 1.4 1.4 0 Other TietoEnator obligations Rent commitments due in one year 45.8 62.4 -27 Rent commitments due in 1-5 years 138.5 174.3 -21 Rent commitments due after 5 years 2.3 5.7 -60 Operating lease commitments due in one year 9.1 7.2 26 Operating lease commitments due in 1-5 years 15.2 7.0 117 Operating lease commitments due after 5 years 0.0 0.0 Other commitments *) 6.1 25.8 -76 Operating lease commitments are principally three-year lease agreements that do not include buyout clauses. *) Including EUR 4.9 (19.3 year 2006) million commitment mainly for purchase of hardware. Notional amounts of derivative financial 2007 2006 instruments, EUR million 30 Jun 31 Dec Foreign exchange contracts 466.2 423.2 Interest rate swaps 102.0 2.0 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 2007 2006 balance sheet date were: 30 Jun 31 Dec Foreign exchange contracts 1.8 -0.9 Interest rate swaps -0.2 -0.2 Derivatives are used for hedging purposes only. Major shareholders 30 June 2007 Shares % 1 Didner & Gerge Aktiefond 2 130 000 2.9% 2 Roburs fonder 1 709 298 2.3% Svenska Litteratursällskapet i 3 Finland 1 298 000 1.8% 4 Tapiola 886 280 1.2% 5 The State Pension Funds 811 500 1.1% 6 Suomi Insurance 724 300 1.0% Mutual Pension Insurance Company 7 Ilmarinen 703 341 0.9% 8 Pekka Viljakainen 649 447 0.9% 9 Länsförsäkringar Fonder 581 643 0.8% Mutual Pension Insurance Company 10 Varma 531 069 0.7% 51 237 Remaining Nominee registered 190 69.1% 12 834 Others 394 17.3% 74 096 Total 462 100.0% Based on ownership records of the Finnish and Swedish central security depositories. On 30 June 2007 TietoEnator posses 500 000 own shares. In June Goldman Sachs Group, Inc. announced that its holding in TietoEnator Corporation had increased to 3 905 502 shares, which represents 5.27% of the share capital and voting rights. On 6 July Deutsche Bank AG announced that its holding in TietoEnator Corporation had exceeded the 5% threshold. On 9 July the company announced that their holding of TietoEnator's share capital and voting rights had decreased to 4.18%. TIETOENATOR CORPORATION For further information: Åke Plyhm, Deputy CEO, TietoEnator, tel. +46 705 658 631, +46 705 65 86 31, ake.plyhm@tietoenator.com, Timo Salmela, CFO, TietoEnator, tel. +358 9 8626 2213, +358 400 434 974, timo.salmela@tietoenator.com, Päivi Lindqvist, EVP, Communications and Investor Relations, TietoEnator, tel. +358 9 8626 3276, +358 40 708 5351, paivi.lindqvist@tietoenator.com or Paula Liimatta, IR Manager, TietoEnator, tel. +358 9 8626 3113, +358 40 580 3521, paula.liimatta@tietoenator.com Press conference for analysts and media will be held in Helsinki, Hotel Radisson SAS, cabinet Finland, Runegerinkatu 2, at 10.00 am CET, (9.00 am CET, 8.00 am UK time). The conference will be hosted in English by Deputy CEO Åke Plyhm, CFO Timo Salmela, EVP Communications and Investor Relations Päivi Lindqvist and Investor Relations Manager Paula Liimatta. The conference will be webcast and published live on the Internet at TietoEnator's website www.tietoenator.com/conferences and materials and there will be a possibility to present questions on-line. An on-demand video will be available after the conference. Conference call starting at 2.00 pm EET, (1.00 pm CET, 12.00 pm UK time) will also be available as live audio webcast on www.tietoenator.com/presentations. The call will be hosted by Timo Salmela and Päivi Lindqvist. 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 to be reserved ten minutes before start of conference call. A replay will be available until 27 July 2007 in the following numbers: US callers: +1 866 583 1035, non-US callers: +44 20 8196 1998, access code 141 833#. An on-demand audiocast of the conference will also be published at TietoEnator's website later during the same day. TietoEnator publishes financial information in English, Finnish and Swedish. All releases are posted in full on TietoEnator's website www.tietoenator.com as soon as they are published. TietoEnator is among the leading architects in building a more efficient information society and one of the largest IT services providers in Europe. TietoEnator specializes in consulting, developing and hosting its customers' business operations in the digital economy. The Group's services are based on a combination of deep industry-specific expertise and the latest information technology. TietoEnator has about 16 000 experts in close to 30 countries. www.tietoenator.com DISTRIBUTION Helsinki Stock Exchange Stockholmsbörsen Principal Media TietoEnator Corporation Business ID: 0101138-5 Kutojantie 10 PO Box 33 FI-02631 ESPOO, FINLAND Tel +358 9 862 6000 Fax +358 9 862 63091 Registered office: Espoo Kronborgsgränd 1 SE-164 87 KISTA, SWEDEN Tel +46 8 632 1400 Fax +46 8 632 1420 mail: info@tietoenator.com www.tietoenator.com |
|||
|